Himachal Pradesh High Court
M/S Una Miracle Foods vs Capital Foods Private Limited And ... on 29 September, 2023
Author: Virender Singh
Bench: Virender Singh
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA OMPs No. 107 & 108 of 2023 .
in CS No. 1 of 2023
Reserved on: 03.07.2023
Decided on : 29.09.2023
M/s Una Miracle Foods ...Plaintiff
of
Versus
Capital Foods Private Limited and another ...Defendants
Coram
rt
The Hon'ble Mr. Justice Virender Singh, Judge.
Whether approved for reporting?1 For the plaintiff : Ms. Madhurika Sekhon Verma, Advocate.
For the defendants : Ms. Shradha Karol and Mr. Aditya Jhayagraja, Advocates.
Virender Singh, Judge.
The order of mine shall dispose of OMPs No. 107 and 108 of 2023, filed by defendant No. 1, in the above-titled suit.
2. The plaintiff has filed the Civil Suit for specific performance of contract and for damages, before this Court, seeking the following reliefs:
1Whether Reporters of local papers may be allowed to see the judgment? Yes.::: Downloaded on - 29/09/2023 20:39:05 :::CIS 2
"a) That a decree of specific performance of contract may be passed in favour of the plaintiff and against the defendants by directing the defendants to perform and abide .
by the terms and condition of manufacturing contract agreement dated 20.10.2021.
b) That the defendants may kindly be directed to adequately compensate the plaintiff to the tune of Rs. 1,29,10,023/- on account of illegal and untimely termination of the Manufacturing Contract Agreement dated 29.10.2021 and of also for the subsequent unseen and uncalculated future losses on account of termination of contract agreement. rt
c) That the respondents may kindly be restrained from selling the company and its assets including their machinery which has been installed in the manufacturing premises of the plaintiff until and unless the claim of the plaintiff is duly settled as per manufacturing contract agreement.
d) That the termination of the manufacturing contract agreement dated 29.10.2021 may kindly be declared as null and void.
e) Any other suitable relief which this Hon'ble Court deems just and proper may kindly be passed in favour of the plaintiff and against the defendants."
3. Alongwith the suit, the plaintiff has filed the application, under Order 39 Rules 1 and 2 of the Code of Civil Procedure (hereinafter referred to as 'CPC'), which has been registered as OMP No. 35 of 2023. In the said application, the following orders, have been passed, by this Court, on 23rd January, 2023:
::: Downloaded on - 29/09/2023 20:39:05 :::CIS 3 "OMP No. 35 of 2023Notice in the aforesaid terms. In the meanwhile, parties are directed to maintain .
status quo, with regard to the subject matter of the lis.
Objections, if any, be filed on or before the next date of hearing.
Compliance of Order 39 Rule 3 CPC be done immediately."
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4. Aggrieved from the said order, OMP No. 107 of 2023 has been moved by defendant No. 1, for vacation of rt order, reproduced above.
5. Since, OMP No. 107 of 2023 is connected with OMP No. 35 of 2023, as such, OMP No. 35 of 2023 is also being disposed of, by this order.
6. OMP No. 108 of 2023 has also been moved by defendant No. 1, with a prayer to refer the matter to arbitration, as per the 'Dispute Resolution Clause, contained in the agreement, entered into between the parties, by dismissing the suit, of the plaintiff.
7. Brief facts, leading to the filing of the Civil Suit, before this Court, may be summed up, as under:
8. The plaintiff has filed the suit on the ground that the plaintiff is a firm, registered under Udyog Aadhar, ::: Downloaded on - 29/09/2023 20:39:05 :::CIS 4 since the year 2017, having upgraded their Udhyam Registration Certificate, as per provisions of Section 2 (n) of .
the Micro and Small Enterprises Development Act, 2006, for carrying on the manufacturing activities of food products, which includes processing and preserving of fruits, vegetables and dairy products. The present suit has of been filed through one of the partners of the said firm.
9. As per the case set up by the plaintiff, the rt defendants entered into a manufacturing agreement with the plaintiff-firm on 29th October, 2021 and as per Clauses 12 and 12.1 of the said contract agreement, the effective date of agreement was 1st July, 2021 and the agreement was valid for 36 months, i.e. upto 1st July, 2024.
10. As per Clause 12.2 of the agreement, the lock-
in period was for 21 months and in term of Clause 12.3 of the said agreement, three months' prior notice was required for termination of the agreement.
11. According to the plaintiff, on 3 rd May, 2022, the plaintiff received a letter of termination of manufacturing agreement, dated 29th October, 2021. The said act of defendants is stated to be arbitrary.
::: Downloaded on - 29/09/2023 20:39:05 :::CIS 512. The reason for termination of the agreement has been stated to be failure of the plaintiff to obtain the .
No Objection Certificate from State Pollution Control Board, whereas, according to the plaintiff, all the requisite permissions were to be obtained by the defendants.
13. On the basis of the above facts, the decree, for of specific performance of the contract, has been sought, with a prayer to direct the defendants to perform and abide by rt the terms and conditions of the manufacturing contract agreement, dated 29th October, 2021.
14. Apart from this, the plaintiff has sought compensation to the tune of ₹ 1,29,10,023/-. The plaintiff has also sought the relief of injunction against the defendants, restraining them from selling the company and its assets, including the machinery.
15. Alongwith the said suit, OMP No. 35 of 2023, under Order 39 Rules 1 and 2 CPC, has also been filed, seeking the relief that during the pendency of the suit, the defendants be restrained from selling out their company, as well as, trade mark and tangible assets.
::: Downloaded on - 29/09/2023 20:39:05 :::CIS 616. Although, the defendants have not filed the written statement/reply to the suit/OMP No. 35 of 2023, .
but, defendant No. 1 has moved OMP No. 107 of 2023, for vacation of order, dated 23rd January, 2023, passed in OMP No. 35 of 2023, on the ground that the plaintiff has no locus standi to seek the relief, against the Company, as, of the manufacturing agreement/contract has been executed only between rtthe plaintiff and applicant-Company (defendant No. 1) and not with the share holders of the applicant.
17. The suit is stated to be not maintainable in view of Clause 15.1 of the agreement, entered into between the parties, as, according to the applicant-defendant No. 1, it has been envisaged in the agreement that any dispute arising between the parties, will be resolved, by way of arbitration. Hence, the proceedings initiated by way of filing the suit, are stated to be the abuse of the process of law.
18. Disputing the act and conduct of the plaintiff, it has been pleaded that the plaintiff had previously relied upon the aforesaid clause and initiated the proceedings, ::: Downloaded on - 29/09/2023 20:39:05 :::CIS 7 under Section 9 of the Arbitration and Conciliation Act, 1996, before the learned District Judge, Una and now, the .
plaintiff has filed the present suit. This material fact has also been concealed by the plaintiff in the pleadings and obtained the ex-parte ad interim order.
19. All these facts have been highlighted to of demonstrate that the plaintiff has concealed the material facts from the Court.
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20. Clause 15 of the agreement has also been relied upon to get the relief, as sought, in OMP No. 108 of 2023, i.e. to dismiss the present suit, filed by the plaintiff and refer the parties to arbitration.
21. According to applicant-defendant No. 1, the plaintiff has also made a reference to the Micro and Small Enterprises Facilitation Council, Himachal Pradesh, under Section 18 (1) of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as 'MSME Act'), seeking the same relief, as has been sought in the present suit.
22. On the reference made by the plaintiff, the matter was referred to arbitration, vide order, dated 17 th ::: Downloaded on - 29/09/2023 20:39:05 :::CIS 8 September, 2022, passed by Himachal Pradesh Micro and Small Enterprises Facilitation Council, however, the said .
claim, before the MSME Arbitrator, has been withdrawn by the plaintiff, on 9th January, 2023.
23. According to applicant-defendant No. 1, in para-11 of the plaint, the plaintiff has taken a different of stand, by pleading that the proceedings were returned to the plaintiff,rt with the permission to approach the appropriate Court, whereas, according to applicant-
defendant No. 1, the plaintiff has misrepresented order, dated 9th January, 2023, passed by the learned MSME Arbitrator, as, vide the said order, no such permission was granted to the plaintiff, as alleged.
24. Apart from this, non-existence of three basic ingredients, i.e. prima facie case, balance of inconvenience and irreparable loss and injury, has also been pleaded in the application, for vacation of stay.
25. OMP No. 107 of 2023 has been contested, by the plaintiff, by filing reply, on the grounds, that nothing has been concealed from this Court.
::: Downloaded on - 29/09/2023 20:39:05 :::CIS 926. The application under Section 8 of the Arbitration and Conciliation Act, i.e. OMP No. 108 of 2023, .
is stated to be not maintainable, being incomplete agreement, without mentioning the name of the Arbitrator.
27. The act of invoking the provisions of Section 9 of the Arbitration and Conciliation Act has been justified by of the plaintiff, by stating that, at the relevant time, the arbitration proceedings were going on and once, the rt arbitration proceedings were dismissed, all the applications became infructuous.
28. It is the further stand of the plaintiff that the reference to MSME Arbitrator was disposed of as having been withdrawn to file the same on the same cause of action and same was not objected to by the defendants.
The suit for specific performance is stated to be not maintainable before the Arbitrator.
29. By way of OMP No. 108 of 2023, heavily relying upon Clause 15 of the manufacturing contract/agreement, it has been pleaded that subsequent to the termination of the agreement, only the proceedings ::: Downloaded on - 29/09/2023 20:39:05 :::CIS 10 could be initiated, as per Clause 15 of the agreement between the parties.
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30. It has also been re-asserted that the plaintiff has filed the application, under Section 9 of the Arbitration and Conciliation Act, before the learned District Judge, Una, and the said application has been withdrawn.
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31. On the basis of the above facts, a prayer to dismiss the suit and to refer the matter to arbitration, has rt been made.
32. The application, OMP No. 108 of 2023, has been contested by the plaintiff, by contesting the relief, as claimed in the application, on the ground that the agreement has been executed between late Shri Rahul Potdar and defendants and that since, Shri Rahul Potdar has now expired and four new partners have joined the Company, as such, they are not the signatory of the present agreement, which pertains to the arbitration clause. This fact has been pleaded to show that on account of strangers to the arbitration agreement, they are not bound by the agreement.
::: Downloaded on - 29/09/2023 20:39:05 :::CIS 1133. It has been contended that when, the application under Section 9 of the Arbitration and .
Conciliation Act was made before the learned District Judge, said Rahul Potdar was alive.
34. I have heard the learned counsel for the parties and have perused the record carefully.
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35. The agreement between the parties, which was executed on 29th October, 2021, and, has been described rt as "Contract Manufacturing Agreement" is on the file.
36. Alongwith OMP No. 107 of 2023, applicant-
defendant No. 1 has annexed copy of the application, under Section 9 of the Arbitration and Conciliation Act, which was filed by the applicant-defendant No. 1, before the learned District Judge, Chandigarh, by applicant-M/s Capital Foods Private Limited, who has been arrayed as defendant No. 1, in the present suit. The same has been filed against plaintiff-M/s Una Miracle Foods. The subject matter of the application was the agreement, dated 29 th October, 2021. The prayer clause of the said application, is reproduced, as under:
"i. Allow the present Application and pass an order restraining the Respondent from in any ::: Downloaded on - 29/09/2023 20:39:05 :::CIS 12 manner whatsoever obstructing and hindering removal of the Applicant's equipment (as set out in ANNEXURE-P-2) by the Applicant and directing the Respondent to handover .
possession and custody of the Applicant's equipment (as set out in ANNEXURE - P-2) to the Applicant;
ii. Allow the present Application and pass an order restraining the Respondent from using, dealing with and/or disposing of the Applicant's equipment (as set out in of ANNEXURE - P-2) in any manner whatsoever;
iii. Allow the present Application and pass an order directing the Respondent to deposit with rt this Hon'ble Court an amount of INR 45 lakhs, or in the alternative, furnish security for an amount of INR 45 lakhs by way of bank guarantee or fixed deposit receipt; iv. Allow the present Application and pass an order directing the Respondent to disclose on affidavit, a list of all assets of the Respondent and of its partners (along with details of any encumbrances on such assets), as also a list of all partners of the Respondent."
37. Reply filed by the plaintiff to the said application has also been annexed with OMP No. 107 of 2023. Interestingly, in the reply, contents of para 64 of the application, which is based upon Clause 15 of the agreement, has not been disputed. The said application is stated to be still pending.
38. Apart from this, as per the document, Annexure
-6, annexed with OMP No. 107 of 2023, the plaintiff has moved the application, under Section 9 of the Arbitration ::: Downloaded on - 29/09/2023 20:39:05 :::CIS 13 and Conciliation Act, against the applicant and four others, before the learned District Judge, Una, mentioning therein, .
that as per Clause 15.1 of the agreement, dispute arising between the parties to the agreement, will be settled and determined by the Arbitrator. The said application was registered as Arbitration Petition No. 9 of 2022. However, of this application was withdrawn on 27 th January, 2023.
The order, dated 27th January, 2023, passed by learned rt District Judge, Una, is reproduced as under:
"27.1.2023 Present: Sh. Ramesh Chander Seth, Advocate counsel for petitioner.
None for respondent.
Case file taken up today.
An application U/S 151 CPC for withdrawal of main petition U/S 9 of Arbitration and Conciliation Act, which is listed for 3.2.2023 for filing reply, has been moved by ld. Counsel for petitioner.
Officer report seen. Perused.
Since, the matter has been stayed by the Hon'ble High Court of H.P. vide order dated 21.10.2022 passed in Arb. Appeal No. 23/2022 titled Capital Foods Pvt. Ltd. Vs Una Miricle Foods and others, and at this stage ld. Counsel for petitioner vide separate statement taken on record stated that he does not want to pursue this Arbitration petition and withdraw the same today. Hence this petition is dismissed as withdrawn. File after due ::: Downloaded on - 29/09/2023 20:39:05 :::CIS 14 completion/registration be consigned to record."
39. Vide order, dated 17th September, 2022, .
Himachal Pradesh Micro Small Enterprises Facilitation Council, has referred the matter to Arbitrator, by appointing Shri M.D. Sharma, retired District and Sessions of Judge, as Arbitrator. Claimant-M/s Una Miricle Foods (plaintiff herein) submitted its statement of claim, but, on rt 9th January, 2023, the said reference has been dismissed as withdrawn, by the sole Arbitrator, by passing the order, which is reproduced, hereinbelow:
"Date 09.01.2023 Present Mr. Jai Gopal Goel, authorised Representative of the claimant company.Mr. Krishna Advocate for respondent No. 1
along with for Mr. Aditya and Mr. Vaibhav Advocates. Respondent No. 2 served by speed post and also through email, hard copy of postal receipt along with the tracking report filed which confirm, the service of notice. None is present for respondent No. 2 as such respondent No. 2 is proceeded exparte. At this stage, Mr. Jai Gopal Goel, withdraws the present reference with permission to file the same on the same cause of action which is not objected subject to reservation of rights. Statement of Mr. Jai Gopal Goel and Mr. Krishna Advocate recorded separately. In view of the statements made above the reference stands disposed of as having been withdrawn with the permission to file the same on the same cause of action. This order ::: Downloaded on - 29/09/2023 20:39:05 :::CIS 15 be placed on the original reference record. The reference record be remitted back to the Chairman Himachal Pradesh Micro and Small Enterprises Facilitation Council, Majithia .
House, Shimla -2. A signed copy of this order supplied to each of the party free of cost."
40. The plaintiff has not disclosed these material facts, with regard to the pendency of the application, under Section 9 of the Arbitration and Conciliation Act, before the of learned District Judge, Chandigarh, as well as, the factum of withdrawal of proceedings, under Section 9 of the rt Arbitration and Conciliation Act, before the learned District Judge, Una. Only, a cursory reference has been made with regard to the arbitral proceedings pending before Shri M.D. Sharma, retired District and Sessions Judge, who was appointed as MSME Arbitrator.
41. The relief of injunction is an equitable relief and the person, who approaches the Court with soil hands, is not entitled for the equitable relief.
42. The relationship of the parties to the present lis is being governed by the agreement, dated 29 th October, 2021. Clause 15 of the said agreement, is reproduced, as under:
::: Downloaded on - 29/09/2023 20:39:05 :::CIS 16"15. Dispute Resolution:
15.1. In respect of any disputes arising between the Parties to the Agreement, the Parties .
herein undertake to settle the same by mutual negotiation and in case no such settlement is arrived at after such mutual negotiations, within 30 (thirty) days of the arising of the said dispute, the same shall be settled and determined by arbitration in accordance with the Arbitration and Conciliation Act, 1996 (the "Act").
of 15.2. The arbitration shall be conducted at Chandigarh in English language by an Arbitrator jointly appointed by both Parties. rt In case Parties fail to jointly appoint Arbitrator, then same shall be appointed by the Punjab and Haryana High Court.
15.3 The award rendered pursuant to such arbitration shall be in writing, and shall be final, binding, and conclusive between the Parties.
15.4 The seat and venue for the arbitration proceedings shall be Chandigarh and the language of arbitration shall be English. The arbitrator shall have he right to give interim directions or interim award and any such interim direction or award passed by the arbitrator shall be final and conclusive and binding on the Parties. Either Party shall be entitled to approach competent courts for interim reliefs."
43. While opposing OMP No.108 of 2023, it has been argued by the learned counsel appearing for the plaintiff, that the original agreement has not been annexed, with the application, by defendant No. 1.
::: Downloaded on - 29/09/2023 20:39:05 :::CIS 1744. In order to buttress the said argument, it has been submitted that without the original agreement, the .
application, under Section 8 of the Arbitration and Conciliation Act is not liable to be entertained.
45. No doubt, alongwith the application, under Section 8 of the Arbitration and Conciliation Act, bearing of OMP No. 108 of 2023, only the photocopy of the agreement between the parties, has been annexed.
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46. It is worthwhile to record herein that in view of the order, passed by this Court on 2nd June, 2023, the original agreement has been placed on record, on 5 th June, 2023. The order, dated 2 nd June, 2023, is reproduced, as under:
"OMP Nos. 107 & 108 of 2023 Replies stand filed.
Learned counsel for the defendant stated that original agreement in question shall be filed during the course of the day today. Registry is directed to place the same on record, if in order.
List for consideration on 13.06.2023.
In the meantime, interim order to continue."::: Downloaded on - 29/09/2023 20:39:05 :::CIS 18
47. In such situation, the objection, so raised, by the learned counsel appearing for the plaintiff, is not liable .
to be considered.
48. While holding so, the view of this Court is being guided by the decision of the Hon'ble Supreme Court in case, titled as Ananthesh Bhakta Represented by Mother of Usha A. Bhakta and others versus Nayana S. Bhakta and others, reported in (2017) 5 Supreme Court Cases rt 185, as the facts and circumstances, of the present case, are squarely covered by the said decision. The relevant paras-27 to 29 of the judgment, are reproduced, as under:
"27. In the present case as noted above, the original retirement deed and partnership deed were filed by the defendants on 12th May and it is only after filing of the original deeds that the court proceeded to decide the application IA No. IV.
28. Section 8(2) has to be interpreted to mean that the court shall not consider any application filed by the party under Section 8(1) unless it is accompanied by the original arbitration agreement or duly certified copy thereof. The filing of the application without such original or certified copy, but bringing original arbitration agreement on record at the time when the court is considering the application shall not entail rejection of the application under Section 8(2).
29. In the present case it is relevant to note that the retirement deed and partnership deed have also been relied upon by the plaintiffs.::: Downloaded on - 29/09/2023 20:39:05 :::CIS 19
Hence, the argument of the plaintiffs that the defendants' application IA No. IV was not accompanied by the original deeds, hence, liable to be rejected, cannot be accepted. We .
are thus of the view that the appellants' submission that the application of the defendants under Section 8 was liable to be rejected, cannot be accepted."
49. So far as the arguments of the learned counsel appearing for the plaintiff, that the agreement is unilateral, of is concerned, there is nothing on record to justify as to how the agreement is unilateral, as, the same has been rt executed between Capital Foods Private Limited, through Shri Kabir Sahni, Head-Operation and Supply Chain and Una Miricle Foods through Shri Rahul Potdar.
50. Therefore, the plaintiff cannot wriggle out from the agreement, merely, on the ground of death of Shri Rahul Potdar, as, the same has been signed by him, on behalf of M/s Una Miricle Foods. Hence, the said argument is liable to be rejected.
51. Now, the next question, which arises for determination, before this Court, is, as to whether the dispute raised, in this case, is arbitral or not.
52. The prayer clause, as made in the suit, has already been reproduced hereinabove. If the relief claimed, ::: Downloaded on - 29/09/2023 20:39:05 :::CIS 20 in the suit, is seen, in the light of Clause 15 of the Contract Manufacturing Agreement, dated 29th October, 2021, then, .
it can be safely be held that the dispute, so raised, in the suit, is purely arbitral.
53. The term used in Clause 15 of the agreement is "any dispute arising between the parties to the agreement", of which includes its enforceability. Even otherwise, the plaintiff has already approached the Micro and Small rt Enterprises Facilitation Council, Himachal Pradesh and the matter has been referred to the MSME Arbitrator, where, the plaintiff has submitted the statement of claims.
As such, the plaintiff is estopped from raising the plea that the dispute raised in the suit, is not arbitral.
54. Another objection has been raised by the learned counsel for the plaintiff to the application, under Section 8 of the Arbitration and Conciliation Act (OMP No. 108 of 2023), that the application has been filed after the passing of the ex parte interim injunction, in favour of the plaintiff.
55. The said argument is devoid of merit, in view of the decision of the Hon'ble Supreme Court in case, titled as ::: Downloaded on - 29/09/2023 20:39:05 :::CIS 21 Rashtriya Ispat Nigam Ltd. and another versus Verma Transport Co., reported in (2006) 7 Supreme Court .
Cases 275. The relevant paras-41 and 42 of the said judgment, are reproduced, as under:
"41. This aspect of the matter came up for consideration before this Court again in Sadhu Singh Ghuman v. Food Corpn. of India [(1990) of 2 SCC 68] wherein it was categorically stated that seeking a direction to the plaintiff to produce the original agreement does not amount to submit to the jurisdiction of the court, which decides the case on merits, rt opining: (SCC p. 71, para 7) "The right to have the dispute settled by arbitration has been conferred by agreement of parties and that right should not be deprived of by technical pleas. The court must go into the circumstances and intention of the party in the step taken. The court must examine whether the party has abandoned his right under the agreement. In the light of these principles and looking to the substance of the application dated 4-1-1985, we cannot form an opinion that the defendants have abandoned their right to have the suit stayed and took a step in the suit to file the written statement."
42. Waiver of a right on the part of a defendant to the lis must be gathered from the fact situation obtaining in each case. In the instant case, the court had already passed an ad interim ex parte injunction. The appellants were bound to respond to the notice issued by the Court. While doing so, they raised a specific plea of bar of the suit in view of the existence of an arbitration agreement. Having regard to the provisions of the Act, they had, ::: Downloaded on - 29/09/2023 20:39:05 :::CIS 22 thus, shown their unequivocal intention to question the maintainability of the suit on the aforementioned ground."
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56. The agreement, which governs the relationship of the parties, contains the arbitration clause. In such situation, being guided by the decision of the Hon'ble Supreme Court, in case, titled as Hindustan Petroleum of Corpn. Ltd. versus Pinkcity Midway Petroleums, reported in (2003) 6 Supreme Court Cases 503, it is rt mandatory for this Court, to relegate the parties to get the dispute resolved, as per Clause 15 of the agreement. The relevant paras-14 and 24 of the judgment, are reproduced, as under:
"14. This Court in the case of P. Anand Gajapathi Raju v. P.V.G. Raju [(2000) 4 SCC 539] has held that the language of Section 8 is peremptory in nature. Therefore, in cases where there is an arbitration clause in the agreement, it is obligatory for the court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original action after such an application is made except to refer the dispute to an arbitrator. Therefore, it is clear that if, as contended by a party in an agreement between the parties before the civil court, there is a clause for arbitration, it is mandatory for the civil court to refer the dispute to an arbitrator. In the instant case the existence of an arbitral clause in the Agreement is accepted by both the parties as also by the courts below but the applicability thereof is disputed by the respondent and the said dispute is accepted ::: Downloaded on - 29/09/2023 20:39:05 :::CIS 23 by the courts below. Be that as it may, at the cost of repetition, we may again state that the existence of the arbitration clause is admitted. If that be so, in view of the mandatory .
language of Section 8 of the Act, the courts below ought to have referred the dispute to arbitration.
xxx xxx xxx
24. This brings us to consider the last question involved in this appeal, namely, the of maintainability of the revision petition before the High Court under Section 115 CPC. The High Court by the impugned order has come to the conclusion that its jurisdiction to entertain rt a revision petition would only be available if the order impugned is such that if it is allowed to stand, it would occasion failure of justice or cause an irreparable injury to a party against whom the said order is made. In support of this finding, the High Court has relied upon certain judgments of this Court. Having perused the said judgments, we are of the opinion that the findings given in those judgments do not apply to the facts of this case at all. We have come to the conclusion that the civil court had no jurisdiction to entertain a suit after an application under Section 8 of the Act is made for arbitration. Therefore, we are of the opinion that the trial court erred when it rejected the application of the appellant filed under Sections 8 and 5 of the Act. In such a situation, refusal to refer the dispute to arbitration would amount to failure of justice as also causing irreparable injury to the appellant. For the said reason, we are of the opinion that the High Court has erred in coming to the conclusion that the appellant was not entitled to the relief under Section 115 CPC."
57. This view has again been reiterated by the Hon'ble Supreme Court, in case titled as Sundaram ::: Downloaded on - 29/09/2023 20:39:05 :::CIS 24 Finance Limited and another versus T. Thankam, reported in (2015) 14 Supreme Court Cases 444. The .
relevant paras-8, 9 and 13 of the said judgment, are reproduced, as under:
"8. Once there is an agreement between the parties to refer the disputes or differences arising out of the agreement to arbitration, and of in case either party, ignoring the terms of the agreement, approaches the civil court and the other party, in terms of Section 8 of the Arbitration Act, moves the court for referring the parties to arbitration before the first rt statement on the substance of the dispute is filed, in view of the peremptory language of Section 8 of the Arbitration Act, it is obligatory for the court to refer the parties to arbitration in terms of the agreement, as held by this Court in P. Anand Gajapathi Raju v. P.V.G. Raju [(2000) 4 SCC 539 : (2000) 2 SCR 684] .
9. The position was further explained in Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums [(2003) 6 SCC 503] . To quote: (SCC pp. 510-11, para 14) "14. This Court in P. Anand Gajapathi Raju v. P.V.G. Raju [(2000) 4 SCC 539 :
(2000) 2 SCR 684] has held that the language of Section 8 is peremptory in nature. Therefore, in cases where there is an arbitration clause in the agreement, it is obligatory for the court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original action after such an application is made except to refer the dispute to an arbitrator. Therefore, it is clear that if, as contended by a party in an agreement between the parties before the civil court, there is a clause for arbitration, it ::: Downloaded on - 29/09/2023 20:39:05 :::CIS 25 is mandatory for the civil court to refer the dispute to an arbitrator. In the instant case the existence of an arbitral clause in the agreement is accepted by .
both the parties as also by the courts below but the applicability thereof is disputed by the respondent and the said dispute is accepted by the courts below.
Be that as it may, at the cost of repetition, we may again state that the existence of the arbitration clause is admitted. If that be so, in view of the of mandatory language of Section 8 of the Act, the courts below ought to have referred the dispute to arbitration."
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13. Once an application in due compliance with Section 8 of the Arbitration Act is filed, the approach of the civil court should be not to see whether the court has jurisdiction. It should be to see whether its jurisdiction has been ousted. There is a lot of difference between the two approaches. Once it is brought to the notice of the court that its jurisdiction has been taken away in terms of the procedure prescribed under a special statute, the civil court should first see whether there is ouster of jurisdiction in terms or compliance with the procedure under the special statute. The general law should yield to the special law--generalia specialibus non derogant. In such a situation, the approach shall not be to see whether there is still jurisdiction in the civil court under the general law. Such approaches would only delay the resolution of disputes and complicate the redressal of grievance and of course unnecessarily increase the pendency in the court."
58. In view of the above, OMP No. 107 of 2023, for vacation of stay, is allowed and interim order, dated 23 rd ::: Downloaded on - 29/09/2023 20:39:05 :::CIS 26 January, 2023, is ordered to be vacated. The application, filed under Order 39 Rules 1 and 2 CPC, being OMP No. 35 .
of 2023, is ordered to be dismissed.
In addition to this, OMP No. 108 of 2023, filed under Section 8 of the Arbitration and Conciliation Act, is allowed and the parties are relegated to the remedy, as of provided by Clause 15 of the agreement, dated 29th October, 2021. rt Consequently, the suit is held to be not maintainable.
Civil Suit No. 1 of 202359. In view of the order, passed in OMP 108 of 2023 (supra), the suit of the plaintiff is held to be not maintainable before this Court. As such, the suit is rejected, being not maintainable, by relegating the parties to the remedy, as provided in terms of Clause 15 of the agreement, dated 29th October, 2021.
60. Pending miscellaneous applications, if any, are also disposed of accordingly.
( Virender Singh ) Judge September 29, 2023 ( rajni ) ::: Downloaded on - 29/09/2023 20:39:05 :::CIS